With Yahoo set to announce more cost cuts, an Internet media veteran offers some advice: Go for it.
A round of layoffs is reportedly looming at Yahoo, so is talk of a deal with AOL Time Warner to rescue the flagging company’s prominence. Wall Street’s lost its faith; shares are worth less than half the $33 a share Microsoft offered earlier this year. And restructuring is in the offing. Now is as good a time as any for Yahoo to grow up and decide what it is going to be.
Like the 26-year old college student entering his eighth year of school without yet having decided his major, Yahoo has gone as far as it can go trying to delay the inevitable.
And like the John Belushi character in that movie classic “Animal House,” who when told he was being thrown out of school said, “eight years down the drain”, Yahoo’s become that bloated character out to have a good time spending more time tapping kegs than keyboards.
When you have the best sports columnists, the best election coverage, the best stock market coverage, you will be the company you always had the promise of becoming.
Well, sober up Yahoo, it’s time to graduate to the real world. Make a decision and go for it. Decide what you think your future should be and go for it. By not deciding, you allow the company to continue to drift. How’s that been working out for you?
Here’s what that decision should be.
Become a real content company. Be the first great new media company of the 21st century. You already have the audience on a digital platform, now do everything you can to keep that audience on your site longer and longer. It’s not like this is a new idea. You have dabbled with it time after time, but you could never pull the trigger and bring in the kind of people you need to build a true media company. Your engineers, who truly ran the company, wouldn’t buy in.
Oh, you tried a couple times. Hiring Lloyd Braun and his gang in Los Angeles was a step toward that goal, but it had a major flaws. 1) Entertainment was definitely NOT the way to start. It’s too expensive and the Internet hadn’t yet developed into an entertainment medium for enough people. 2) A major cultural divide exists between the entertainment industry and the techies… or anyone else who works for a living.
So whenever you got too close to making the decision to take the plunge, the forces in the company rose up and pushed back, leaving the techies in charge.
The problem is you picked the wrong content to start with. Play to the strengths of the Internet. Give people timely, useful, customized information that they want quickly and on whatever digital platform they’re using.News, weather, traffic, financial info and data, travel info, help shopping, even little league scores.
You have gone part of the way at times. Your news interface has some editors who choose what goes on your news pages. All-powerful Google still hasn’t figured out that computers can’t necessarily replace news judgment. So you crush their fully-automated site in news traffic. But you haven’t made the kind of investment that would allow you to crush the sites managed by the major existing news leaders… even though they remain vulnerable.
What we have learned over the past few years is that the new media landscape will include many things, from original journalistic content, to user generated content, to curated links to valued information presented elsewhere, to customized “news you can use”.We have also learned that storytelling on the digital platform is in its infancy. This is a medium where the storyteller can use text, still photos, video, audio, interactive graphics… you name it. So we should assume that there will be an entirely new generation of storytellers who mix in all of those skills. Because the old media companies are stuck in their own media forms, it is likely that a new media company will lead the way in new forms of storytelling. Be that company.
After you excel at making Yahoo News, Yahoo Sports, Yahoo Lifestyle and Yahoo Finance major media brands, you will have the complete Internet package with the very real potential of owning the hearts and minds of the next generation. And you will have the full offering for major advertisers.
When you have the best sports columnists, the best election coverage, the best stock market coverage – head to head with existing media brands – you will be the company you always had the promise of becoming: The next great media company.
Conveniently, the situation at the existing media companies is going south so quickly that you have two major advantages: There’s a lot of talent out there on the street; and, your major competitors, the so-called mainstream media, are scrambling to deal with rapidly dwindling revenue streams and cutting costs because they can’t spend the money to build new revenue streams.
So they are probably ripe to partner up, which could help you move even faster. Why not offer to produce news in all forms to partners to distribute over their systems, whether broadcast, print or interactive. License your news to as many outside outlets as possible to help cover costs.Why not co-produce 60 minutes with CBS, or cover business news for ABCNews.com. Bid for NCAA tournament Internet rights.
Yahoo can become huge again if you do this right. The brand can stand for something very special and can give a boost to the future of journalism. The fact is, you are starting with a huge advantage. You have an audience on the site for things like email, stock quotes, sports scores, etc. And you have a good deal of technology. Also, you have extended yourself on to mobile platforms.What a powerful head start!
But the most important thing you have going for you is technology. While you might not be Google, you should be pretty good at this, and a LOT better than the existing media companies which own virtually no technology and very little technology expertise. New media will be defined by customer demand and technology that meets that demand. You are in a unique position to study that demand and build or improve the technology needed to meet it.
One more thing.
Yahoo wasn’t alone in trying to figure out its role as a content creator. AOL had a similar problem. Even after they merged with Time-Warner, a company that understood and rewarded editorial leadership, AOL was run not by editors or producers with vision, but essentially by the “Circulation” department. The marketing people who sent out those millions of free discs built a company purely on convenience of use. By treating content essentially as a commodity, they made it easy for their users to go elsewhere when they were no longer captives of AOL’s dial-up service. Had the powers-to-be at Time Warner spent their time and energy building a first rate interactive content business, they could have kept users longer, whether or not they were dial up subscribers.
I’m pretty sure neither AOL nor Yahoo still fully understands the magnitude of their lost opportunity. AOL had the audience, but wasted it away. Yahoo is close to doing the same.
So now is the moment. The mainstream media are reeling. Dive in and hire major editorial talent and go out and reinvent the storytelling process on our newest platform.
In ten years you could be the most dominant media company in the world.